Another step in a long recovery

In small business, banking, housing, and the entire economy, 2010 was a transitional milestone in the long recovery. While conditions remained difficult, there was progress. Importantly, consumer and business confidence appeared to be improving as we entered 2011, according to business contacts and other soundings taken by Atlanta Fed researchers.

Psychology matters. Until late in 2010, Atlanta Fed economists detected scant confidence among the region's businesspeople and consumers, according to Michael Chriszt, who coordinates the Atlanta Fed research department's Regional Economic Information Network, or REIN. The Atlanta Fed identified this uncertainty as a serious impediment to a durable and sustainable recovery. Improving attitudes about the future, therefore, could be a significant positive influence on the direction of the economy

"I believe," Lockhart said in a January 2011 speech, "that as businesses become more assured that growth will continue and their revenues will grow, they will increase investment and hiring."

As businesses become more assured that growth will continue and their revenues will grow, they will increase investment and hiring.